US-headquartered financial institution, Northern Trust, has passed muster once more to secure the NZ Superannuation Fund (NZS) custody gig it has held since 2007.
Northern Trust was reappointed to the plum job of supplying “global custody, compliance monitoring and securities lending services” to the almost $60 billion NZ sovereign wealth fund following a review last year, according to a release.
Paula Steed, NZ general manager of strategy and shared services, said in the statement that the US firm “has provided the NZ Super Fund with high-quality custodial and associated services and we are confident it will continue to do so”.
Sovereign wealth funds are usually loathe to change custodians given the complex transition issues involved but are obliged to review service providers regularly.
In 2015, however, Northern Trust was bumped from a co-custody role it shared with JP Morgan for the other large NZ government-run fund managed by the Accident Compensation Corporation (ACC).
The ACC appointed JP Morgan as sole custodian for a fund now valued at over $50 billion.
While the NZS retains Northern Trust as master custodian, the fund also farms out other bespoke custody duties to various providers including Deutsche Bank, Citibank, HSBC, Euroclear Bank, State Street and Guardian Trust, the fund’s 2022 annual report shows.
Aside from locking-in its custody provider, the NZS ended 2022 with a US$100 million allocation to the Wellington Management Climate Innovation Fund I.
The climate fund run by US investment stalwart, Wellington, targets “non-concessionary” (ie with no do-good discount) venture capital returns from companies operating in sectors such as “energy transformation, sustainable buildings and cities, transportation and mobility, industrial and enterprise efficiency, and food and agriculture”, the NZS statement says.
According to the release, the NZS arrangement with the Wellington fund “could potentially expand to include co-investments in successful portfolio companies”.
Over the last year or so the NZS has ramped up its climate-change exposures with investments in the Fifth Wall Climate Technology Fund and the Generation Investment Management Sustainable Solutions Fund IV.
Last June the government-ordained fund also converted its passive global equity portfolios to an off-the-shelf benchmark aligned to the Paris Agreement on climate change: the shift saw a significant reduction in underlying stock holdings.